In the survey, 76 percent of the parents were somewhat or very familiar with 529 accounts, but many showed a lack of understanding about their flexibility and other advantages. The authors argue that more awareness is needed around attributes like the ability to change account beneficiaries at any time, the ability to pay for expenses beyond tuition and school fees, the ability to adjust investments within the accounts, options for the disposition of 529 savings after beneficiaries no longer need the funds and whether they can take advantage of tax deductions and credits for educational savings.

More than two-fifths of the respondents expressed concern that their savings would impact their children’s opportunities to be offered student aid. While most of the assets within 529 accounts are exempt from the need-based financial aid calculations on the FAFSA and other student aid applications, the parents in the survey consistently overestimated how much they would be expected to contribute annually to their children’s college expenses from their 529 plan.

Fidelity conducted a survey of 1,984 parents with college-bound children of all ages with household incomes of at least $30,000 a year in July and August.

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